The New York Supreme Court ordered Tether to freeze the transfer to Bitfinex

Coindesk (Coindesk)reportsA New York judge ordered cryptographic exchange Bitfinex and its affiliated stable currency issuer Tether to hand over documents related to a loan and credit line to Bitfinex.

New York state Supreme Court justice Joel Cohen spoke at a preliminary hearing in New York City last week. It ordered Bitfinex and Tether's executives and employees to stop lending Tether's reserves to Bitfinex, while proposing other rules in an ongoing investigation by the New York attorney general's office.

"The court found that the preliminary injunction addresses legal questions of enforcement, but at the same time does not unnecessarily interfere with the legitimate business activities of the subject of investigation," he wrote.

The judge specifically ordered:

Tether shall not lend any assets to Bitfinex or other parties except in the course of normal business operations;
Tether shall not allocate any funds in its reserves to executives, employees or other individuals, except salaries and regular payments by contractors, consultants or suppliers;
Neither Bitfinex nor Tether may in any way modify the documents requested in the original subpoena of NYAG
The injunction expires in 90 days, but the NYAG office can apply to the court for an extension two weeks before that.

Just a few weeks ago, NYAG obtained a preliminary injunction freezing Tether's assets and requested documentation for about $625 million in loans and a $900 million credit line. Crypto Capital, the company that handles payments at Bitfinex, holds about $850m, but because it cannot be used, Bitfinex needs the money to continue processing customer withdrawals.

Crypto Capital's operators, Reginald Fowler and Ravid Yosef, were later sued by the Department of Justice for providing illegal banking services to encryption companies.

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